Enron Corporation

This article has been placed under review.

See also EOG Resources, formerly Enron Oil & Gas.

The ENRON Corporation was a corrupt energy company based in Houston, Texas that went bankrupt as a result of committing institutionalized, systematic and well-planned accounting fraud. Since it's fall, it has become a symbol of corporate fraud and corruption.

Enron was an energy trading and communications company based in Houston, TX employing around 21,000 people by the middle of 2001. Careful accounting strategies allowed it to be listed as the seventh largest company in America, and it was expected to dominate the trading it had virtually invented in communications, power and weather securities. Instead it became the biggest corporate failure in history.

The fall of Enron
After a series of scandals involving irregular accounting procedures bordering on fraud involving it and its accounting firm Arthur Andersen, Enron stood at the verge of undergoing the largest bankruptcy in history by mid November 2001. A white knight rescue attempt by a much smaller energy company, Dynegy, was not viable.

The fall of the value of investors' equity per share in Enron during 2001 was from $85 to 30 cents. As Enron was considered a blue chip stock, this is an unprecedented and disastrous event in the financial world. Enron's plunge in value occurred after it was revealed that many of its profits and revenue were the result of deals with limited partnerships which it controlled. The result of this is that many of the losses that Enron encountered were not reported in its financial statements.

The firm's European operations filed for bankruptcy on November 30, 2001, and sought Chapter 11 protection in the US. The long term implications of Enron's collapse are unclear, but there is considerable political fall-out both in the US and in the UK relating to the monies Enron gave to political figures (around $6m since 1990).

Enron was formed in 1985 with the merger of Houston Natural Gas and InterNorth, engineered by Houston Natural Gas CEO Kenneth L. Lay. It was originally involved in the transmission and distribution of electricity and gas throughout the United States and the development, construction and operation of power plants, pipelines, etc. worldwide.

Enron grew wealthy through its pioneering marketing and promotion of power and communications bandwidth commodities, and related risk management derivatives as tradable securities, including exotic items such as weather derivatives.

As a result Enron was named "America's Most Innovative Company" by Fortune magazine for five consecutive years, from 1996-2000. It was on Fortune's "100 Best Companies to Work for in America" list of 2000, and was legendary even amongst the elite workers of the financial world for the opulence of its offices.

Its global reputation was undermined, however, by persistent rumours of bribery and political pressure to secure contracts in Central and Southern America, in Africa and in the Philippines. Especially controversial was the $30bn contract with the Indian MSEB (Maharashtra State Electricity Board), where it is alleged that Enron officials used political connections within the George Walker Bush administration to pressure the Indians. On January 9, 2002, the U.S. Department of Justice announced it was going to pursue a criminal investigation of Enron and Congressional hearings began on January 24.

Former Enron CFO Andrew Fastow, alleged mastermind behind Enron's complex network of offshore partnerships and questionable accounting practices, was indicted on November 1, 2002, by a Federal grand jury in Houston on 78 counts including fraud, money laundering, and conspiracy.

Enron and the tobacco industry
An October 1988 United Press article states that Enron planned to ban smoking from all of its downtown Houston offices effective January 1, 1990. This policy was quite restrictive for its time.

In March 2000, Enron gave a presentation titled "Total Energy Management Outsource Solution" to executives of the R.J. Reynolds (RJR) Tobacco Company. The presentation sought to convince RJR to outsource all of its energy supply and maintenance needs to Enron. At the beginning of the presentation, to help make the sale, Enron states, "After extensive research and analysis we believe our two companies have similar corporate cultures..." 

In a March 30, 2001 memo to Brendan McCormick of Philip Morris, the PR firm Apco Worldwide directed Philip Morris to look at the "Corporate Responsibility" section of Enron's Website as a model for how to pattern a similar section of PM's Website.

Enron and Wind Energy
Enron bought Zond Wind Energy and around 1990 persuaded California to allow them to package the "environmental attributes" of wind turbines as commodities separate from the actual energy produced. They are now called "green tags" or "renewable energy certificates." In addition, Enron worked with Texas governor George W. Bush to ensure the continuation of a "production tax credit" for wind energy. After Enron's collapse, General Electric bought Enron's wind division.

PR companies and people who worked for or on Enron accounts

 * Diane Bazelides, Enron managing director of marketing and PR
 * Mark Palmer, Enron Vice-President of PR
 * Don Middleberg
 * Hirst Co.; Albuquerque had a $5,000 per year account for media and community relations for the division Enron Transportation and Storage.
 * Bates Churchill, Houston
 * Bitner.com Ft. Lauderdale, Florida

Hill & Knowlton and Enron
In April 2002, O'Dwyers reported that there was a team of seven Hill & Knowlton consultants "that is trying to salvage Enron" and were "managing the flow of information between new management and Capitol Hill." In late 2003, O'Dwyers reported that Enron had paid H&K $300,000 in the first six months of 2003.

Those identified were:
 * Howard Paster, the H&K CEO who headed the team;
 * Gary Hymel, the then H&K vice chairman
 * Paul Clarke, a staffer in the first Bush Administration
 * Brian Hart, a former staffer with Republican Senator Judd Gregg of New Hampshire.
 * Neil Dhillon
 * Amy Key
 * Nora Grannel.

Government officials who worked for Enron
Also see Bush administration and the Enron connection.

Enron cultivated a long list of former government officials to lobby on behalf of the company's interests, including the following:


 * Mike Andrews, former Democratic member of Congress from Texas
 * Ed Bethune, former Republican member of Congress from Arkansas
 * Edwin A. Buckham, former chief of staff to House Majority Whip Thomas D. DeLay, R-Texas
 * Ed Gillespie, former communications director at the Republican National Committee and a top communications advisor to George W. Bush during the campaign
 * Gene E. Godley, former Assistant Secretary of the Treasury in the Jimmy Carter administration
 * Wendy Gramm, head of the Commodity Futures Trading Commission
 * J. Bennett Johnston, former U.S. Senator who chaired the Senate Committee on Energy and Natural Resources
 * Michael Lewan, chief of staff to Sen. Joseph I. Lieberman (D-Connecticut) from 1989-92
 * Thomas F. McLarty III, former White House chief of staff
 * Elizabeth Moler, chair of the Federal Energy Regulatory Commission
 * Robert Mosbacher, former Commerce Secretary
 * Marc F. Racicot, chairman of the Republican National Committee
 * Ken Raisler, former general counsel of the Commodity Futures Trading Commission
 * Linda Robertson, Bill Clinton administration Treasury official
 * Brent Scowcroft, National Security Adviser to former President George H.W. Bush
 * Greg Simon, media and telecommunications adviser to former Vice President Al Gore
 * Charles E. Walker, former deputy secretary of the U.S. Treasury
 * Frank Wisner, former U.S. ambassador to India

Follow the Money

 * Gregory Palast, "A high price to pay for the power and the glory," London Observer, February 4, 2001. What are the links between Enron, Reliant Energy and Southern Company?
 * Molly Ivins, "Enron-gate. Where are the investigations of Bush's liaison with the bankrupt company?" workingforchange, December 12, 2001.
 * Enron in 1997 saw that the Oregon Legislature was so easy to buy that Enron dissolved itself and reincorporated in Oregon! Yes, Enron is an Oregon corporation -- not just Portland General Electric (PGE), but Enron itself.
 * Gregory Palast, "California Reamin': California and the Power Pirates," London Observer, April 23, 2003.
 * Katherine Yurica, "Fraud Traced to the White House," SF Indymedia, July 22, 2003.

Related SourceWatch Resources

 * Bush Dynasty
 * follow the money
 * Global Crossing
 * investor relations
 * oil industry

Press Releases

 * Press Release: ENRON Board Approves Proposal to Create New Pipeline Company, Blackstone Group, March 19, 2003.

General

 * The Enron homepage
 * Enron News, News Sources, News Searches, and Business Research:
 * Enron in the Wikipedia.
 * Enron ODP links about the scandal.
 * "The Fall of a Giant: Enron's Campaign Contributions and Lobbying," Open Secrets.org.
 * Timeline: "Andersen's fall from grace," BBC, June 17, 2002.
 * "Enron scandal at-a-glance," BBC, August 22, 2002.
 * "In Depth: "The Enron Affair," BBC, February 17, 2003.
 * "Q&A: The Enron collapse," BBC, July 8, 2004.
 * Enron Complexxon of incorporated governance
 * Philip Morris document titled "PM Online Media Strategy" suggesting PM model its own corporate repsonsibility web page after Enron's "Corporate Responsibility" web page.

2001

 * "Enron starts dumping PR firms", O'Dwyers PR Daily, December 4, 2001.

2002

 * Joshua Lipton, "Enron's Helpers", Columbia Journalism Review, Issue 2, March/April 2002.
 * Scott Sherman, "Gimme an 'E'!: Uncovering the uncovered story", Columbia Journalism Review, Issue 2, March/April 2002.
 * "Enron suit implicates nine US banks," BBC, April 8, 2002.
 * "Enron auditor 'feared lawsuit'," BBC, May 15, 2002: "David Duncan, the government's star witness in the Andersen trial, has said fears over interpretation prompted him order the shredding of documents relating to Enron."
 * "Andersen guilty in Enron case," BBC, June 15, 2002.
 * "Ex-Enron executive pleads guilty," BBC, August 21, 2002. Michael Kopper was the first Enron who pleaded guilty "to charges of money laundering and fraud conspiracies."
 * "Enron creditors battle for cash," BBC, August 27, 2002.
 * Briony Hale, "Struggling to nail Enron," BBC, August 29, 2002.
 * "Enron finance chief charged with fraud," BBC, October 2, 2002: "Andrew Fastow, the man who managed Enron's murky finances, has surrendered to the FBI and been charged with fraud."

2003

 * "Enron's trail of deception," BBC, February 13, 2003.
 * "'Death penalty' for Enron," BBC, June 25, 2003: "The bankrupt energy trader Enron has been barred by regulators from selling gas and electricity in the US market."
 * "US banks fined over Enron," BBC, July 29, 2003: "The two banks, JP Morgan Chase and Citigroup, stood accused by the US financial watchdog, the Securities and Exchange Commission (SEC), of helping Enron cover up its financial weakness."
 * Kurt Eichenwald, Enron Seeks Millions for Power Never Delivered to Sierra Pacific, New York Times, October 6, 2003.
 * "Bankrupt Enron's HQ sold for $55m," BBC, December 3, 2003.

2004

 * "Enron finance chief pleads guilty," BBC, January 15, 2004: "Former Enron finance chief Andrew Fastow has pleaded guilty to fraud charges stemming from his role in the collapse of the scandal-hit firm."
 * "Ex-Enron chief on fraud charges," BBC, February 19, 2004: "Former Enron boss Jeffrey Skilling has been charged with 35 counts of fraud, insider trading and lying about the state of the firm's finances."
 * Vince Gonzales, "Enron Traders Caught On Tape," CBS News, June 1, 2004: "When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated."
 * "Enron bids to rise from the ashes," BBC, June 3, 2004: "Enron, the disgraced and bankrupt US energy trader, is presenting a rescue plan to a New York court, and could be reborn under a new name within weeks."
 * "The banks that robbed the world," BBC, June 9, 2004.
 * "Enron ex-boss pleads 'not guilty'," BBC, July 8, 2004: "Enron ex-chairman Kenneth Lay has pleaded "not guilty" to 11 criminal charges over the collapse of the former US energy giant."
 * "US papers react to Enron charges," BBC, July 9, 2004.
 * "Lea Fastow begins prison sentence," BBC, July 12, 2004: Lea Fastow, "whose husband Andrew was sentenced to ten years in jail for his role in the collapse of Enron, has begun a year's prison term of her own."
 * "Enron to emerge from bankruptcy," BBC, July 15, 2004.
 * "Enron executive pleads guilty," BBC, July 30, 2004. re Kenneth Rice
 * "Top Enron official pleads guilty," BBC, August 26, 2004: Mark Koenig: "Enron's former head of investor relations has become the latest ex-executive of the firm to plead guilty to fraud linked to its collapse."

2005

 * Frank Rich, "Enron: Patron Saint of Bush's Fake News," New York Times, March 20, 2005.
 * "Enron's Causey 'to plead guilty'," BBC, December 28, 2005: "Richard Causey, former top accountant of fallen US energy giant Enron, is expected to plead guilty to at least one criminal charge on Wednesday."
 * "Ex-Enron accountant makes deal. Causey is expected to plead guilty, testify against Lay, Skilling," Associated Press (Boston Globe), December 28, 2005.
 * Kristen Hays, "Ex-Enron Accountant Strikes Plea Deal," Associated Press (ABC News), December 28, 2005.
 * Enron: The Smartest Guys in the Room, movie released 2005

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